I'm nervous

This topic contains 11 replies, has 3 voices, and was last updated by  Bruin79 3 years ago.

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  • #18561

    James

    Hello TS Paul and community, just as the subject line reads… I’m nervous. I’ve been seeing a lot of doom and gloom articles lately, more then I’ve ever noticed in the past. That may be partly because I’ve become more aware then I used to be but in all honesty, so the economy about to tank?

    Job creation is on a downward tend, exports and imports are downward, GDP is dropping below projections… Etc etc. O and my favorite that refineries are running out of room for gas so that is going to start backing up the supply chain of oil, causing more oil oversupply problems.

    I’m not bothering to go find and link all of those articles but I swear I have read all of that within the last week.

    I’m not really sure exactly what the question here is, but I’d like to get everyone’s take on some of these. And I’d like to that TS Paul and the community. Since I started paying attention to the economy, I’ve yet to see I site or a group of people that helped put things in prospective better. Thank you!

    P.S. Posting from my phone, and it’s not letting me proof read, so sorry for errors

    #18562

    jesse

    I think you should not be nervous. Right now you should be at 85% C and 15% I. The statistics shown by TSPaul overwhelms everything you just mentioned. We will be fine as long as we follow TSPaul.

    #18563

    Anne
    Participant

    I disagree, I believe there is reason to be a little nervous. I hope TS Paul is correct, however, I believe that the Fed’s monetary policy has distorted the economic numbers. Everyone has different risk perspective and are different points in their career. If you are closer to retirement, or more risk adverse for whatever reason, I would suggest putting aside a certain portion of you investments in safe assets. You should not blindly follow anyone without assessing your particular situation and outlook.

    #18565

    TS Paul
    Keymaster

    Thanks for the great topic.

    I don’t see large volumes of “doom and gloom” media reporting as a possible indicator of impending recession. Media outlets are in this for the money. Depending on which study you are looking at, bad news or negative headlines results in up to a 69% higher click through rate on the internet. And the same is true for television – negative news attracts a much higher level of engagement than positive or neutral news. I don’t believe the economic news is worse these days, I just think the folks who make their money selling advertising are following the dollars into the abyss of selling disaster and calamity.

    As for whether or not the economy is going to tank, I don’t believe it is based on the indicators I look at. And I haven’t seen any sources I consider credible suggesting that the probability of recession in the next year is higher than 20% (and most of the sources I follow put it lower than that).

    None of which is to say that some significant external event couldn’t tip the US economy from its anemic recovery into a sudden recession (taking our Thrift Savings Plan balances down with it), but I really don’t think we are headed there on our own.

    The TSP Allocation Guide www.TSPallocation.com

    #18599

    Bren

    I’m on Anne’s side on this one. We are in uncharted waters in this economy and stock market. The last 8 years we’ve seen a complete stale mate on the fiscal side of policy, and an attempt to make up for that – and heal a crisis – through monetary policy. Distortions are all around us and we should be nervous.

    I do agree with Paul that the media does take news to the extreme. They do it with good news, and bad news. It’s all about publishing click bait online and it takes some restraint not to fall into the trap.

    That said the market, in my opinion, is being supported mostly by cheap money and the fed. The fundamentals do not look good from where I’m sitting. I believe wee are much later in the business cycle than what the data shows due to the data being distorted.

    Yes we’ve created a lot of low paying jobs, we’ve forced retirees with conservative investment portfolios back in to the job market to try to save their retirement which boosts jobs numbers (look at job numbers based on age groups), and we’ve fostered an environment that the stock traders and their algorithms have LOVED. Do I think it’s going to crash in a blaze of glory – no. The folks propping up the market have tremendous power.

    What I do believe though, is the returns from this market have been stolen from the future. I don’t believe we will see on average double digit returns between now and my target retirement date, and the risks are EXTREMLY high right now. Risk vs Reward is what you need to analyze. I’m investing just enough to get my TSP match right now, and putting my excess capital into alternative investments. Real estate and international are 2 areas I’m focusing on at this point in time but they fit my situation and timeline. If you need help with your situation seek the advice of a trusted professional, not a message board (no offense Paul 😉 )

    As I’ve said in the past, and Anne stated, don’t blindly follow any ones investment advice. Manage your risk profile not just in the TSP, but your life and situation as a whole and you will sleep at night.

    #18600

    Anne
    Participant

    With continued depressed earnings and unemployment claims picking up (not buying NY Spring Break or Verizon Strike), the major banks have lowered their year-end targets for S&P 500. Looks like we will continue to go sideways or down.

    Lack of Earnings Quality and Debt Downgrades Limit S&P 500’s Upside

    http://www.wsj.com/articles/u-s-jobless-claims-spike-again-1463056387

    #18601

    Anne
    Participant

    Interesting charts that support TSPaul’s position that we are still in expansion stage of the business cycle based on sectors.

    http://stockcharts.com/public/1842472/tenpp/1

    In my opinion, it seems that we have already peaked or Fed’s rate increase will suppress any future peak in the near term.

    #18602

    Bren

    Here’s a perfect example of the misinformation all around us today – be it negative spin or positive spin.

    Did some searches on retail sales. I see heading after heading stating “retail sales better than expected” “the consumer is spending” on and on.

    It’s all about the spin, and with this latest report, apparently all about the seasonal adjustment. They had an intelligent economist on Bloomberg yesterday (didn’t catch her name still looking for it online) who dug into the report.

    From her analysis it was all about Easter. See they seasonally adjust the numbers and this year Easter fell in March. If Easter had fallen in April and they used last years adjustment the actual number would have been down .9% year over year.

    During the interview they quickly said “yeah but Easter DID in fact fall in March” to whit she replied “true but they did not apply the seasonal adjustment for Easter to march either, keeping the March number artificially inflated as well.”

    Just did about 20 minutes of searches to locate this video clip and this economists perspective. Nothing. Even the Bloomberg searches about retail sales all show a positive spin.

    Retail sales is an interesting topic I think. Are they down because of a slowing economy – in my opinion I believe they are down because of a fundamental change in consumer behavior that occurred as a result of the ’09 melt down. When people get nervous, they remember what happened during the housing bust, and delay the purchase. If nothing else we aren’t all pulling massive amounts of money out of home equity this time around and spending it. This wouldn’t be so bad, if the US economy wasn’t 70% consumer spending.

    If I find the clip I’ll post it. When it comes to the media reporting Paul is spot on. It’s all about what gets you to watch through the commercials or click the link.

    #18603

    Bren

    Stephanie Pomboy. http://www.bloomberg.com/news/videos/2016-05-14/full-show-what-d-you-miss-05-13

    Starts at about 18 minutes in. Funny only way to find it was to locate the full episode.

    #18604

    Rolfeskj

    I also feel we are on the verge of a large drop but then again I was very surprised at the fast recovery from the last large correction back in January. I lost a ton of money moveing from S to F after 20%+ drop in my fund, just to see it shoot right back up.

    We will hit a resesion sooner or later but it’s hard to tell when especially with the FED holding up the market with its policies.

    My guess is the economy will hold until the election is over. If it dropped now it would hurt the Democrats in the election. Unless it just gets to far and we see another drop mid election like 2008.

    #18605

    Anne
    Participant

    Bren, I liked the Bloomberg link. She is a market contrarian, her website: http://www.macromavens.com/press.html

    When explaining what happened with the seasonal adjustments used, Ms Pomboy used terms “suspicious data” & “statistical shenanigans” when explaining how they came up with positive government report of +1.3% vs -0.9% had they used prior method of calculation. I’m wondering how accurate other government data really is, like unemployment, inflation etc., given the constant revisions to projections. 😕

    I think that as a result of technology and the last recession, our economy has fundamentally changed. It will be interesting to see how the election turns out but I think that both political parties need a complete paradigm shift to address our current economic situation effectively.

    #18606

    Bruin79

    At this rate the way the market has been the last few days I’ll have to work until I’m 70 years old, the market gains no traction at all, it’s one step forward and two steps back each week.

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